Conditional customer deposits are not tax collections where refund is promised if no sales tax is payable.

Amounts taken from customers as conditional deposits, with an express undertaking to refund them if no sales tax became payable, were not collections by way of tax under section 11(2) of the Mysore Sales Tax Act, 1948. The Court treated the money as held against a contingency rather than as realised tax, and once the sales were found not taxable the dealer had no beneficial interest in the sums. On that basis, the demand to remit the amounts to the Government was unsustainable. The broader construction of the section and the constitutional objections were not decided.

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Issues: Whether amounts received by a dealer from customers only as conditional deposits, subject to refund if no sales tax was ultimately payable, fell within section 11(2) of the Mysore Sales Tax Act, 1948 as collections by way of tax.

Analysis: The amounts in question were taken not as realised tax but as deposits held against a contingency, with an express undertaking to refund them if the sales were held not taxable. Once the tax authorities themselves determined that the relevant sales were outside the taxable turnover or otherwise not liable to tax, the dealer retained no beneficial interest in the money and held it only for the depositors. Such a receipt was therefore not a collection by way of tax within the meaning of section 11(2). In view of that conclusion, it was unnecessary to decide the wider construction of the section or the constitutional objections raised.

Conclusion: Conditional deposits taken on an express promise of refund do not amount to collections by way of tax under section 11(2); the demand to pay them over to the Government was unsustainable and the assessee succeeded.

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